[quote=jpinpb] As far as consumer spending, we’ve discussed this. One of the greatest expenses is housing. If that is factored out, you have extra money, discretionary spending. That is one of the biggest reasons our economy is doing as well as it is.

Should be interesting to see what’s going to happen when people are forced out of their free-living situation and have to start digging in their pockets for housing again.

Even if they manage to get loan mods, that’ll mean less money eating out and/or shopping.[/quote]

That’s a salient observation, jp. Even people who aren’t being affected, either by being in a comfortable financial position, or having purchased a house at a greatly reduced price courtesy of the meltdown, are going to find significant reductions in their disposable income levels. Property tax rates are rising rapidly, as states and municipalities try to compensate for the loss in Federal aid, and reductions in their own tax revenues resulting from foreclosures and lowered property values in their areas.

A side observation: I can’t imagine that the banks are going to allow this “free living” situation to go on much longer without imposing harsh penalties on their mortgagors. Any thoughts on this?